Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 26, 2022 erstellt
Beschreibung:
This study examines the impact of robo-advising on personal wealth management based on a unique data set of individual investors’ investment accounts. Robo-advising portfolios have better performance, measured as lower volatility and a higher Sharpe ratio, than investors’ self-directed portfolios. More importantly, we find evidence that robo-advising has a spillover effect on its adopters: it improves their financial sophistication. Investors have more diversified portfolios and exhibit fewer behavioral biases in portfolio management and fund choices in their self-directed accounts after adopting robo-advising. We use whether investors are exposed to the robo-advisor advertising as the instrumental variable for identification, and our findings still hold in the instrumental variable estimation. The spillover effect is more prominent for adopters who interact with the service more actively and who were less rational before adopting the app. We also find that adopters learn from the robo-advisor by simply imitating its portfolios or strategies. These findings indicate that robo-advising effectively plays a role in educating investors through repeated interactions with its adopters and setting investment models that are easy to follow. Collectively, this study not only solidifies the fact that robo-advising improves investors’ investment performance but also provides large-sample, non-laboratory evidence that robo-advising can serve as a financial education tool that improves investor sophistication